|Sears Canada Shareholders Vote Against Special Resolution To Effect Share Consolidation|
TORONTO, Nov. 14, 2006 (Canada NewsWire via COMTEX News Network) -- Sears Holdings Application for Leave to Appeal Denied
Sears Canada Inc. (TSX: SCC) announced the results of the votes cast today at a special meeting of shareholders held to consider a share consolidation. Although the special resolution was approved by shareholders as required by applicable corporate law, it was not approved by shareholders as required by applicable securities laws.
Under the Canada Business Corporations Act, the special resolution required approval by at least two-thirds of the votes cast at the Meeting by shareholders present in person or represented by proxy. At the Meeting, 85,064,186 votes were cast in favour of the special resolution, representing 81.32% of the total votes cast. 19,540,848 votes were cast against the special resolution, representing 18.68% of the total votes cast. Accordingly, the special resolution was approved by over two-thirds of the votes cast at the Meeting as required by the Canada Business Corporations Act.
Under the securities laws of Ontario and Québec, the special resolution also required approval by a majority of the "minority" shares voted at the Meeting, which excludes certain common shares of the Corporation held by Sears Holdings Corporation ("Sears Holdings"), its affiliates and certain related parties. In addition, on August 8, 2006, the Ontario Securities Commission issued a cease trade order (the "OSC Order") that prohibits certain shares of the Corporation from being included in the category of "minority" shares for the purposes of voting on the special resolution, namely 7,500,000 shares acquired by an affiliate of Sears Holdings pursuant to a deposit agreement with Vornado Realty L.P. (the "Deposit Agreement Shares"), and an aggregate of 7,611,000 shares owned by The Bank of Nova Scotia, Scotia Capital Inc. and Royal Bank of Canada that are the subject of support agreements previously entered into between those parties and Sears Holdings (the "Support Agreement Shares").
Sears Holdings unsuccessfully appealed the OSC Order to the Divisional Court of Ontario and sought leave to appeal to the Court of Appeal of Ontario. The Corporation has been advised by Sears Holdings that its application for leave to appeal has been denied.
At the Meeting, 12,220,669 votes attached to the "minority" shares, which excluded the votes attached to the Deposit Agreement Shares and the Support Agreement Shares, were cast in favour of the special resolution, representing 38.48% of such minority shares. 19,540,848 votes attached to the "minority" shares, which excluded the votes attached to the Deposit Agreement Shares and the Support Agreement Shares, were cast against the special resolution, representing 61.52% of such minority shares. Accordingly, the special resolution was not approved by the minority as required by applicable securities laws and the Corporation will not be proceeding with the share consolidation contemplated by the special resolution.
The Corporation has agreed to permit representatives of each of Sears Holdings and certain minority shareholders, namely Pershing Square Capital Management, L.P., Hawkeye Capital Management, LLC and Knott Management Partners LLC, to review proxies submitted in connection with the meeting, the ballots and the tabulation of the vote for five business days following the meeting. It is possible that either of such parties may seek to challenge the outcome of today's vote.
This release contains information which is forward-looking and is subject to important risks and uncertainties. Forward-looking information concerns the Company's future financial performance, business strategy, plans, goals and objectives. Factors which could cause actual results to differ materially from current expectations include, but are not limited to: the ability of the Company to successfully implement its cost reduction, productivity improvement and strategic initiatives and whether such initiatives will yield the expected benefits; the results achieved pursuant to the Company's long-term credit card marketing and servicing alliance with JPMorgan Chase Bank, N.A. (Toronto Branch); general economic conditions; competitive conditions in the businesses in which the Company participates; changes in consumer spending; seasonal weather patterns; customer preference toward product offerings; changes in the Company's relationship with its suppliers; interest rate fluctuations and other changes in funding costs and investment income; fluctuations in foreign currency exchange rates; the possibility of negative investment returns in the Company's pension plan; the outcome of pending legal proceedings; the outcome of the takeover bid by SHLD Acquisition Corp., a wholly-owned indirect subsidiary of Sears Holdings Corporation, to acquire the outstanding shares of Sears Canada which it and its affiliates do not already own; and changes in laws, rules and regulations applicable to the Company. While the Company believes that its forecasts and assumptions are reasonable, results or events predicted in this forward-looking information may differ materially from actual results or events.
Sears Canada is a multi-channel retailer with a network of 187 corporate stores, 180 dealer stores, 64 home improvement showrooms, over 1,928 catalogue merchandise pick-up locations, 107 Sears Travel offices and a nationwide home maintenance, repair, and installation network. The Company also publishes Canada's most extensive general merchandise catalogue and offers shopping online at www.sears.ca.
SOURCE: Sears Canada Inc.
Contact for Media: Vincent Power, Sears Canada, Corporate Communications, (416) 941-4422, firstname.lastname@example.org